3 ways digitizing accounting processes can help businesses

Photo by Ken Teegardin

Today, businesses are increasingly shifting their work procedures online or onto the cloud, a remote network of servers on the web that stores, manages, and processes data to boost operational efficiency.

This includes accounting, which is usually characterized by time-consuming but humdrum tasks such as record-keeping on spreadsheets.

Late payments affect nearly every small business in Singapore, with nine out of 10 small-business owners saying they have clients who don’t pay on time, according to research by Xero, a cloud accounting software firm headquartered in New Zealand. The study also found that these businesses spend approximately 25 days a year chasing overdue invoices.

“This is more time than they spend on any other single task. Online invoicing helps them claw back that time,” says Kevin Fitzgerald, regional director for Xero’s operations in Asia.

Porting accounting processes onto the cloud can shave hours off from tedious but important jobs like expense management, invoicing, or billing, among others.

The cloud allows everyone in a company to work in concert using a single set of data, which is updated in real time. Users can also access the information on any device at any given time, improving efficiency and visibility.

“People get into small businesses because they’re passionate about that business. They don’t go into it to do debt collection or bank reconciliations, so we try to take care of that for them,” says Fitzgerald.

1. Efficiency: More time, more money

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The Mindful Company, a Singaporean retailer that sells personalized jewelry, made the leap to cloud-based accounting two years ago. Now, it only takes the team three to five hours every month to handle accounts, down from the 25 hours a month that it used to spend tallying numbers on an Excel sheet.

“We’re also able to access up-to-date accounts easily on the go, which is very convenient,” says Wen Ling Lim, a former tax adviser who co-founded the business.

She adds that The Mindful Company scouted around for accounting software after realizing that spreadsheets were a waste of time. It chose Xero because of its impressive capabilities as well as the ease of use and transition.

“It was quite a relief when we decided to make the switch and see it all set up in Xero. It makes life much easier that the systems all talk to each other, and we don’t have to worry about managing and reconciling data from each system separately,” notes Lim.

Since making the change, The Mindful Company has observed positive effects on its business. With the endless hours spent reconciling spreadsheets out of the way, the founders found it easier to concentrate on their core business.

2. Visibility: A one-glance overview

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With accounting processes all safe in the cloud, companies can get a quick overview of where the business stands financially whenever they want to. With just one glance, business owners can get real-time information about their company’s cash flow, bills, payrolls, and expenses.

The ability to do this “provided a great deal of clarity on where the business is financially and helps us to better plan for the future,” points out Andrew Lim, co-founder of Boxgreen, a local ecommerce company that delivers healthy snacks.

A typical day at Boxgreen involves product sampling, stock-taking, paying bills, and going through marketing plans.

Lim adds that since it ported the company’s accounting system onto Xero’s cloud three years ago, it has streamlined Boxgreen’s operations.

“It’s made life easier by automating mundane administrative tasks like billing, bank reconciliation, syncing stock movement with our inventory system,” he says.

3. Enabling growth: Nowhere else to go but up

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Growth is important to businesses, but this also means that companies may find themselves sinking in a sea of administrative work.

“When the business grew, I couldn’t keep up with all the transactions anymore. I needed an easy solution to manage my finances and understand what I’m spending on each month,” says Felix Tan, co-founder of Anywhr, a travel portal that creates customized trips based on customers’ chosen themes. This mounting burden pushed him to manage his accounting via Xero.

Instead of populating spreadsheets, Tan can now focus on taking the company to the next level. Xero’s highly customizable functionalities also meant that Anywhr’s workflow wasn’t affected by the switch at all.

Tan cites Xero’s bank feed integration as one of the most impactful features in simplifying and automating what used to be tiresome work. This is achieved through Xero’s bank partnerships and allows transactions to flow from small businesses’ accounts to their accounting platforms overnight, saving up to 15 hours a month, as they no longer have to manually input information from bank statements.

Open banking application programming interfaces (APIs) are also utilized, allowing for fintech firms and other financial institutions to integrate the software into their platforms with minimal development.

“I was so excited to finally get rid of all the manual data entry and get my time back,” Tan adds. “Seeing the transactions sync was like watching beer pour out of a tap – beautiful.”

Xero is a cloud-based accounting software that helps small businesses digitize accounting processes to improve business efficiency.

Visit Xero’s website to read more about these Singaporean businesses’ stories and sign up for a free 30-day trial.